Geron has quit on embryonic stem cells. The company is abandoning
its world-leading clinical trial, aimed at using stem cells to treat
people paralyzed with spinal-cord injuries. It is laying off more than a third of its staff, and is writing off about $8 million. It has also repaid
the California Institute of Regenerative Medicine (CIRM) a loan of more
than $6 million, plus interest. Geron will continue to monitor the four
patients currently enrolled in the phase 1 clinical trial, and says it
is looking for another company to take it over.

The decision to terminate the trial seems to be all business, a
departure from past practices that seemed motivated more by hype and
wishful thinking. Geron's stock has been plummeting (down from $6.34 to $1.60
over the year), and new management is conducting triage. The ESC trial
is only in phase 1, a safety trial, in which severely injured patients
receive low doses of treatments that are frankly unlikely to do much
good; the point is to ensure that they do no harm. Results from that are
not expected till 2014, but the company has two cancer drugs
in phase 2 clinical trials, which should be completed by early 2013.
The brutal truth is that the company may run out of money if it tries to
maintain all three projects.

Geron has been in trouble for a while. Former CEO Thomas Okarma, who left abruptly in February, was the subject of ridicule
for his repeated announcements that ESC-based clinical trials would
begin "next year" — that is, 2005, 2006, 2007, 2008 — and the trial they
eventually came up with was so dubious that Arthur Caplan called it "nuts and hugely risky." Even experts in the field thought that targeting spinal cord injury in the first ESC trial was dubious, though some seem to be more willing to be critical now it has ended.

And that was on the scientific and perhaps commercial merits. The
ethical problems were much worse, since the trial was intended for
people who had recently suffered damage to their spinal cords.
Bioethicist Laurie Zoloth (who was once on Geron's ethics advisory board, and basically approved of the study), noted at the time of its announcement that:

"True informed consent in this very vulnerable population, people
who have suffered a devastating and life-changing injury a week prior
to being asked to enter the first clinical trial for such long-awaited,
highly publicized and desperately needed treatment, is hard to obtain
and will need to be carefully thought through."

But of course stem-cell treatments have been hugely politicized
over the past decade, to the point that Shirley Tilghman, the President
of Princeton, warned of "a variation of irrational exuberance."
Many patient advocates were swept up in the hopes for cures, and at
least some of them are now furious. Daniel Heumann, a board member of
the Christopher and Dana Reeve Foundation, said:

"I'm disgusted. It makes me sick. To get people's hopes up and
then do this for financial reasons is despicable. They are treating us
like lab rats."

More temperately, Stephanie Williams, of The Spinal Cord Injury Network, is quoted as saying:

"It seems a great loss that a clinical trial that required so
much effort to establish, and went through a rigorous FDA approval
process, should falter due to adverse economic conditions."

Their distress is entirely understandable, though it perhaps
betrays some naivety. The stem-cell field has been bedeviled by hype all
along. This has involved high-profile fraud, on the part of Hwang Woo-suk, and frequent examples of "science by press release,"
most notably by Advanced Cell Technology (ACT), which does also do real
science; indeed, it is the second company to start clinical trials on
ESC-based therapies, in its case for a form of blindness. Geron itself
has faced accusations of over-promising and haste for years, some of them from this blog.

What of CIRM's role? After Geron's announcement, they issued a remarkably bland press statement, followed by an internal memo that expressed deep disappointment (the California Stem Cell Report has the text). It's a real blow to them: Geron was the first private company to receive funds from CIRM to run a clinical trial using ESCs.

This was a loan, not a grant, and was only made, as the indefatigable David Jensen discovered, after a "major departure from longstanding procedures." The proposal received a low score
(66/100) that was not publicly revealed until Jensen specifically asked
for it. And the other applicants who might have competed for those
funds rather surprisingly all withdrew.

The suspicion arises that CIRM, or some people within it, badly
wanted the trial to proceed in the hope that it would give them a
therapeutic success to boast about. If so, the decision just backfired.

According to Geron, the ESC trial had turned up no new problems. So what changed? Significantly, John "Chip" Scarlett
took over as CEO in September. (David Greenwood acted as interim CEO
after Okarma left, and is now President and CFO.) Scarlett may be
bringing a more objective assessment of the company's prospects.

Will Geron even survive? The company has burned through about $700 million in the last two decades. In the first three quarters of this year, it lost $65 million on revenues of $2 million. That will still leave it with an estimated $150 million
at the end of the year, but clearly money is getting tight. Moreover,
Geron's vaunted portfolio of intellectual property in this area may also
be worth less than it once was. Roger Pederson, now of Cambridge but
formerly of UCSF and once funded by Geron, told Gretchen Vogel of Science Insider that induced pluripotent stem cells may have changed the field decisively:

"Advances in the stem cell field are disruptive innovations that
have the potential to supercede earlier innovations, hES cells being one
of those. I don't know if Geron looks at it that way, but I do."

And no one seems to want to pay much for the rights to their ESC
trial. So it's not clear what will happen to the four patients, one of
whom has been profiledextensively. Informally, Scarlett told the New York Times
that "there had been no sign of safety problems" but also "no sign"
that the treatment was helping. Monitoring them clearly has to be a
priority. Even if the trial stops, the patient care absolutely must
continue.

The future of the industry is clearly shaken by this development. Robert Lanza of Advanced Cell Technology remains an optimist:

"It leaves us holding the flag. There's lots of pressure on us to
deliver a success to keep the field alive, but of course it's the
second mouse that often gets the cheese."

What does this mean for companies that the California Institute
for Regenerative Medicine, the state's stem cell research funding
agency, is pushing toward clinical trials? Will they only get so far
before they, too, exit the business? And just why would I want to invest
in a space where one of the most promising companies just called it
quits?